U.S. govt threatens to seize RI assets over OPIC dispute
JAKARTA (JP): The United States might seize Indonesian assets if it fails to settle the US$290 million claim made by the U.S government's Overseas Private Investment Corp. (OPIC), U.S. Ambassador Robert Gelbard said here on Tuesday.
Ambassador Gelbard said his government was beginning to lose patience with the Indonesian government's reluctance to pay the OPIC claim.
"There is always the possibility of declaring expropriation," Gelbard told reporters about the possible impounding of Indonesian state assets.
"If we were to do this (expropriation), it would result in a dramatic deterioration of the rupiah and would hurt Indonesia very much," he added.
OPIC made its claim after state electricity company PT Perusahaan Listrik Negara (PLN) failed to pay independent power producer MidAmerican Energy Holding, formerly known as Calenergy, a sum of $572 million as ordered by an independent arbitration panel.
MidAmerican filed arbitration proceedings against PLN in September 1998 after the state company refused to pay for electricity from MidAmerican's geothermal power plant in Dieng, Central Java and after the government suspended its other plant in Patuha, West Java.
PLN lost the arbitration proceedings last year and was ordered to pay MidAmerican $572 million. Struck by financial difficulties, PLN refused to pay the claim, forcing MidAmerican to call in its OPIC insurance. OPIC paid $290 million of the claim.
"The result unfortunately was that OPIC - an agency of the U.S. government - had to pay out the largest claim in its history to this company (MidAmerican)," Gelbard explained.
He said his government had shown patience during negotiations despite reluctance from the Indonesian side to negotiate a serious settlement.
Gelbard criticized Indonesia for delaying the negotiation process, and regretted negative statements such as those made by Finance Minister Bambang Sudibyo.
He was referring to Bambang's statement in March saying that Indonesia would not pay OPIC the claim because it had no money.
Bambang has said that the contract with MidAmerican, negotiated under former President Soeharto's regime, was tainted with corruption, collusion and nepotism.
The power purchase contracts were signed with MidAmerican's subsidiaries Himpurna California Energy Ltd (HCE) and Patuha Power Ltd (PPL).
HCE is a joint venture between MidAmerican and PT Himpurna Enersindo Abadi, a company formed by Indonesian military veterans. PPL is a joint venture between MidAmerican and local company Mahaka Energy.
The finance minister further denied the claims of Indonesian responsibility, as it was a deal based on OPIC's unilateral decision.
"But we insist that the Indonesian government must honor its obligation," Gelbard said.
The ambassador said he was looking forward to a settlement very soon, as the U.S. government's patience was nearing its end.
"Many members in our Congress have lost patience and are urging us," he said referring to the possibility of declaring expropriation.
Gelbard said that the OPIC dispute was already hurting Indonesia's credit rating and the country's investment climate, and was discouraging investors from entering Indonesia.
State Minister of Investment and State Enterprises Development Rozy Munir said he had not been informed yet on the latest development in the OPIC negotiations.
Rozy, who is a member of PLN's restructuring team, said he regretted that negotiations with OPIC apparently failed to reach a settlement.
"It's a pity that we cant' reach a win-win solution, because there had been some positive signals in the beginning," he said without elaborating on what the signals were. (bkm)